After incorporating the risk of the pension assets into the overall capital structure, the weighted average cost of capital (WACC) for capital budgeting purposes is closest to: A. 7.8. B. 8.2. C. 6.5.
After incorporating the pension assets and liabilities into the capital structure the new operating assets beta becomes 1.04 as shown in the previous question. Thus for capital budgeting purposes the WACC is: 3 + 1.04(5) = 8.2
